Would-be Queen Mary operator abandons attempt

A leading candidate to run Long Beach's Queen Mary attraction and develop its surrounding grounds has pulled out of negotiations with the city, officials said Friday.

But other developers interested in leasing the 55-acre site are scheduled to bid at an auction later this summer.

The city of Long Beach owns the Art Deco-era ocean liner that has been docked across Queensway Bay from the city's downtown for nearly 40 years. It has a hotel, restaurants, exhibits and hosts a number of special events.

But since 2005, the city has been working to find a new partner after its leaseholder, Queen Seaport Development Inc., filed for Bankruptcy Court protection.

A trustee was appointed by the court to resolve Queen Seaport's outstanding debts and find new investors. As part of the plan, the property lease is scheduled to be auctioned Aug. 14, said the trustee, Los Angeles attorney Howard Ehrenberg.

One developer, O&S Holdings of Santa Monica, has agreed to pay a minimum $41 million, the amount necessary to pay off Queen Seaport's lenders and other creditors. Other bidders would have to offer at least $2.5 million more than O&S to win the auction, Ehrenberg said.

Meanwhile, the city had been quietly negotiating with a group of investors, which included the Washington-based private equity firm Carlyle Group, to sell the lease for $49 million.

However, this week the group, which called itself Save the Queen, sent a letter to Long Beach saying it was ending its bid because of what it characterized as the city's refusal to reach agreement on key issues, City Atty. Robert Shannon said.

Shannon said the city disagreed with the group's position and said it was unfortunate that the Save the Queen group went public with what he described as confidential talks.